Aged Care (Bond Security) Bill 2005

Bills Digest no. 84 2005–06

Aged Care (BondSecurity) Levy Bill2005

WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.

The Aged Care (Bond Security) Levy Bill 2005 (the Levy Bill or
the Bill) will enable the Commonwealth to impose a levy on approved
providers of aged care if it needs to recover its costs (including
administrative costs) after repaying accommodation bonds to aged
care residents whose approved providers become insolvent and
default.

The Levy Bill is part of a suite of three Bills. The other Bills
are the Aged Care (Bond Security) Bill 2005 (the Bond Security
Bill) and the Aged Care Amendment (2005 Measures No. 1) Bill 2005
(the No. 1 Bill). An overview of the purpose of the three Bills is
found in the Bills Digest for the Bond Security Bill.

This Digest should be read in conjunction with Bills Digests
Nos. 83 and 85 of 2005 06.

For a background on aged care in Australia and a summary of the
financial implications of the three Bills, see the Bills Digest for
the Bond Security Bill (Bills Digest No. 83, 2005 06).

The Levy Bill, which enables a levy to be imposed, is a
stand-alone Bill separate from the related Bond Security Bill. This
separation is done for an abundance of constitutional caution and
is designed to forestall legal challenges and ensure that the
legislation is not invalidated by the High Court.(2)

Clause 3 applies the legislation to all the
States and the internal Territories (ie the Australian Capital
Territory, the Northern Territory and Jervis Bay Territory).

Clause 4 provides that the Crown in each of its
capacities (ie Commonwealth, State and Territory) is bound by the
legislation but not liable to be prosecuted for breaches of it.

A levy can be imposed on approved providers(3) of
aged care once a costs recoupment determination is made by
the Minister (clause 6). Such a determination is
made when the Commonwealth has not recouped money it has paid out
in compensation to aged care residents entitled to bond refunds
from a defaulting approved provider or when the
Commonwealth wants to recover associated administrative costs. The
Bond Security Bill provides for the making of costs recoupment
determinations and contains a process via which defaulting approved
providers are identified and arrangements are made for the
Commonwealth to compensate affected aged care residents and recoup
its costs.

As stated above, the Bill does not actually impose a levy.
Instead, the rate of any levy will be determined by regulation
(clause 7). The rate cannot exceed the costs
recoupment determination amount in any particular case
(clause 8). As the second reading speech for the
Levy Bill points out:

each default event is likely to be different, [so]
the Government will take the necessary steps to work out the
details of the levy when the situation occurs, including the rate
at which the levy will be recouped. This will enable the Government
to consider all the factors which will influence how and when the
levy is to be imposed and ensure that costs to Government are
recouped without jeopardising quality of care for
residents.(4)

While any levy imposed may apply different rates to different
classes of approved provider, it cannot discriminate between
providers on the basis of their location in a particular State or
part of a State (clause 9). This proviso has been
included with section 99 of the Commonwealth Constitution in mind.
Section 99 reads:

The Commonwealth shall not, by any law or
regulation of trade, commerce, or revenue, give preference to one
State or any part thereof over another State or any part
thereof.

Clause 10 is a standard regulation-making
clause. Note, however, any regulations necessary or convenient for
facilitating the collection of the levy-such as who pays
the levy, when it is payable, how it is paid, penalties for late
payment, repayment etc-will be made under the proposed Bond
Security Bill.

Schedule 5 commences six months after the Aged Care Amendment
(2005 Measures No. 1) Bill 2005 receives Royal Assent unless
commenced earlier by proclamation. Schedule 5 requires approved
providers to provide the Secretary with written information about
such things as accommodation bonds when requested to do so. This
commencement of Schedule 5 is integral to the effective operation
of both the Levy Bill and the Bond Security Bill.

As stated elsewhere in this Digest, the Bill does not actually
impose a levy. Rather it enables a levy to be imposed. However,
general drafting practice is followed ie that bills imposing a levy
(tax bills) are stand-alone bills. Even in relation to imposition
bills, High Court jurisprudence suggests that bills imposing
taxation may be validly combined with legislation for the
assessment, collection and recovery of taxation (see Permanent
Trustee Australia Pty Ltd v. Commissioner of State Revenue 211
ALR 18). However, bills are separated for an abundance of
constitutional caution springing from section 55 of the
Commonwealth Constitution which reads:Laws imposing taxation shall
deal only with the imposition of taxation, and any provision
therein dealing with any other matter shall be of no effect.

The expression, approved provider is defined in the Aged
Care Act 1997 as a person or body in respect of which an
approval under Part 2.1 is in force, and, to the extent
provided for in section 8-6, includes any State or Territory,
authority of a State or Territory or local government
authority.

Second reading speech, House of Representatives,
Hansard, 8 December 2005, p. 15

Jennifer Norberry
Law and Bills Digest Section
Greg McIntosh
Social Policy Section
31 January 2006
Bills Digest Service
Information and Research Services

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